There are many topics related to trading allowed or not to government employees. Today I will discuss the rules related to trading and Investments for Government employees.
According to the Rule 14(1) of AIS (Conduct) Rules, 1968 which provides:
14(1) No member of the Service shall speculate in any stock, share or other investments but this provision will not apply to occasional investment made through Stock-brokers or other persons duly authorised on license under the relevant law.
Explanation:Frequent Purchase or sale or both of shares, securities or other investments shall be deemed to be speculation within the meaning of this sub-rule. which means if you are frequently buying or selling of any securities(Stocks, Bonds, F&O, etc) and Investments for the purporse of short term earnings are not allowed in any case. Simply trading includes frequently buying and selling of securities.
Government employees can invest in securities like Stocks, Bonds, Mutual Funds, IPOs, etc for long term horizon especially more than 365 days. As frequent meaning is not defined properly in above circular you can sell securities before 365 days buy with genuine reason.
In the light.of Rule 14(1) of AIS (Conduct) Rules, 1968, with a view to enable the administrative authorities to keep a watch over the transactions in any stock, share or other investments etc. in respect of members of All India Services (AIS), it has been decided that an intimation may be sent in the enclosed Proforma to the prescribed authority every year, if the total transactions in stock, share or other investments etc. exceed six months’ basic pay of Government servant during a calendar year (to be submitted by 31st January of subsequent year).
Which means suppose your monthly basic pay is 30,000 and if you invested more than 1,80,000 during a calender year then you ned to inform about this investments to your concerned authority in described form.
It is also clarified that since share, securities, debentures, etc are treated as moveable property as per explanation-I under rule 16 of AIS (Conduct) Rules, 1968, if an individual transaction exceeds two months’ basic pay of the member of service as prescribed in Rule 16(4) of ibid rules, intimation to the prescribed authority would still be necessary. The intimation as envisaged in para 2 above will be in addition to the said intimation under Rules 16(4) of AIS(Conduct) Rules, 1968.
Which means suppose your monthly basic pay is 30,000 and your individual/single transaction exceeds 2 months of basic pay which is 60,000 in this case, then also you need to update about this transaction to your concerned authority.
Proforma for intimation of total transactions in any stock, share or other investments etc. under Rules 16(5) of AIS (Conduct) Rules, 1968.
- Name of the officer
- a. Designation: ……………..
- b. Service to which belongs and cadre:………………………………………………….
- c. Employee ID/Code No:…………………………………………………………………..
- Scale of pay and present pay:………………………………………………………………
- Details of each transaction made in share, securities, debentures, or other investments etc. during the calendar year (Attach separate sheet, if required)……….
- Particular of the party/firm with whom transaction(s) is made:-
- Is party related to the applicant?………………………………………………….
- Did the applicant have any dealings with the party in his/her official capacity at any time or is the applicant likely to have any dealings with him in the near future……………………………………………………….
- Source(s) from which financed:-
- If personal savings, details thereof…………………………………………
- If other source, details thereof……………………………………………….
- Any other relevant fact which applicant may like to mention.
Declaration
I hereby declare that the particulars given above are true.
Place:
Date:
Signature
Designation
Source: https://dopt.gov.in
Qus 1: Can Government Employees trade at Night: NO
Qus 2: Can Goernment employees trade in commodity after working hours: NO
Qus 3: Can Govenrment employees Trade in Currency or Forex: NO
Qus 4: Can Government employees trade in family member account: NO
Qus 5: Can Goernment Employees Invest in Mutual Funds SIP/Limpsum: YES
Penalties will depends on the scale of misconduct. It can be holding your promotion to termination, but in that case your retirement benefits and pension won’t affect.
As per above discussion I can only tell you don’t trade frequently, No employer allow you for trading during working hours as it impact the productivity. Government employees allowed to invest for long term wealth creation.